Price rises in UK shops slow as retailers apply heavy discounts to lure shoppers

Price rises in UK shops have slowed as retailers applied ‘heavy discounting’ to their goods in an effort to entice shoppers amid weakening consumer confidence, the industry’s trade group said. Shop price inflation rose by 1% year-on-year in April, a slowdown from 1.2% in March and below the three-month average of 1.1%, according to the British Retail Consortium (BRC). Retailers made discounts to clothing, furniture, and DIY goods, the BRC said in its monthly survey of its members, compiled with NielsenIQ (NIQ). Inflation for non-food items decreased to -0.1% year-on-year in April, against growth of 0.1% in March. This is below the three-month average of 0%. Recent surveys have shown households are becoming more cautious around spending as they brace for a fresh cost of living shock due to rising energy and food costs linked to the Iran war. At the weekend, Darren Jones, chief secretary to the prime minister, warned that the UK faces higher prices for food and fuel for at least eight months post-war. UK inflation increased to 3.3% in March, up from 3% in February. Consumer confidence slid in April to its lowest level since October 2023, according to GfK. Helen Dickinson, the BRC’s chief executive, noted that retailers competed harder on price to stimulate spring spending despite weakening consumer confidence. However, she added that the Middle East conflict would soon impact consumer prices. A separate CBI survey found that retail sales volumes were below seasonal norms in April and expected to remain poor in May, with 68% of retailers reporting year-on-year declines, the lowest since 1983. Online retail sales volumes dropped at the fastest rate since January 2024, and wholesalers also reported declines. Martin Sartorius, the CBI’s lead economist, said retail conditions deteriorated in April, with sales momentum weakening amid fragile consumer confidence. Meanwhile, food price inflation fell to 3.1% year-on-year in April, from 3.4% in March, as retailers offered discounts on Easter items like chocolate. Fresh food price rises slowed to 3.9% from 4.4% in March, below the three-month average of 4.2%. Mike Watkins, head of retailer and business insight at NIQ, predicted increased fuel prices would lead to higher inflation in the food and non-food supply chains. The BRC called on the government to moderate shop price inflation by fixing non-commodity charges, which make up half of the average business energy bill in the UK.